VZCZCXRO2336
RR RUEHLH RUEHPW
DE RUEHIL #3598/01 3220136
ZNR UUUUU ZZH
R 170136Z NOV 08
FM AMEMBASSY ISLAMABAD
TO RUEHC/SECSTATE WASHDC 0114
INFO RUEHRC/DEPT OF AGRICULTURE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEHRC/USDA FAS WASHDC 4277
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUMICEA/USCENTCOM INTEL CEN MACDILL AFB FL
RHMFISS/CDR USCENTCOM MACDILL AFB FL
RUEKJCS/SECDEF WASHINGTON DC
RUEHKP/AMCONSUL KARACHI 0620
RUEHLH/AMCONSUL LAHORE 6352
RUEHPW/AMCONSUL PESHAWAR 5205
RUEHNE/AMEMBASSY NEW DELHI 4033
RUEHBUL/AMEMBASSY KABUL 9406
RUEHIL/ODRP ISLAMABAD PK

UNCLAS SECTION 01 OF 03 ISLAMABAD 003598 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: ECON ETRD EAID EFIN ENGY PK
SUBJECT: GOVERNMENT TO PRIVATIZE 17 PUBLIC SECTOR ENTITIES 
 
¶1. (SBU) SUMMARY.  On November 13, Naved Qamar the newly appointed 
Privatization Minister presented the fiscal year 2008-2009 
privatization plan to Pakistan's parliament despite severe 
disagreement on the subject.  The Privatization Ministry has 
identified 57 public sector entities for future privatization, 17 of 
which it proposes privatizing this fiscal year.  END SUMMARY. 
 
¶2. (SBU) On November 13, Privatization Minister Syed Naveed Qamar 
presented the 2008-2009 privatization plan to the Lower House of 
Pakistan's National Assembly.  The move was made despite severe 
criticism of the Government of Pakistan (GOP) earlier this week when 
it announced the intent to privatize Qadirpur Gas Field of the Oil 
and Gas Corporation of Pakistan.  Qamar, however, assured the House 
that the government would make a final decision on the privatization 
of the Qadirpur Gas Field after reaching consensus in parliament. 
Parliament members reminded the now ruling party (Pakistan Peoples 
Party) that as the opposition party it used to demand that all 
privatizations proposals would be brought before the National 
Assembly.  The Privatization Ministry has identified 57 public 
sector entities for future privatization.  The Ministry proposes 
privatizing the following 17 public sector entities in the current 
fiscal year. 
 
¶3. (SBU) Heavy Electrical Complex (HEC): HEC is one of the 
industrial units of the State Engineering Corporation engaged in the 
manufacturing and refurbishment of power transformers, and is 
located about 65 kilometers (km) from Islamabad.  HEC makes various 
types of transformers with a primary voltage range of 66 and 132 
kilovolts.  In addition, the HEC undertakes repair and refurbishment 
of old and damaged power transformers up to 500 kilowatts. 
 
¶4. (SBU) National Power Construction Company (NPCC): NPCC works on 
power projects including extra high voltage transmission lines, 
cable networks, low voltage distribution network, substations, power 
generation plants, industrial electrification, external lighting of 
housing complexes.  The services offered by NPCC include survey, 
design, and procurement of materials, installation, erection, 
testing and commissioning.  NPCC's main area of operation during the 
last three decades has been Middle East with a concentration in 
Saudi Arabia and contracts worth over USD 600 million secured and 
completed.  It is a public sector company under the Federal Ministry 
of Water and Power.  The privatization Commission has identified 
pre-qualified bidders for the NPCC. 
 
¶5. (SBU) Jamshoro Power Company Limited (JPC): On August 27, 2008, 
Pakistan's Planning Commission decided to invite fresh Expressions 
of Interests for the privatization of JPC located in Sindh Province. 
 JPC was established as a result of the unbundling of Pakistan Water 
and Power Development Authority (WAPDA) and was organized to take 
over all the properties, rights, assets, obligations and liabilities 
of three thermal power stations namely Jamshoro, Kotri and Lakhra 
with a total nameplate capacity of 1204 megawatts.  The GOP intends 
to sell 51 percent of the company's equity, including management 
control, to a strategic investor or a consortium while maintaining 
49 percent.  JPC facilities are located near Hyderabad with key 
connections to the national grid for supply to Karachi. 
 
¶6. (SBU) Pakistan Tourism Development Corporation (PTDC): The PC 
intends sale of 25 motels and one restaurant owned and operated 
throughout Pakistan by the Pakistan Tourism Development Corporation. 
 The hotels range from four to 47 rooms and are from 90 km to 1620 
km (Karachi) from Islamabad. 
 
¶7. (SBU) Qadirpur Gas Field (QGF): The GOP plans to sell a 37 
percent share of OGDCL's Qadirpur gas field along with the transfer 
of operational control.  The transaction is temporarily delayed 
until consensus is reached in the National Assembly on the sale of 
the gas field. 
 
¶8. (SBU) Larkana Coal Mining Project (LCM): LCM is located 176 km 
north of Karachi.  The mine is owned and operated by Pakistan 
Mineral Development Corporation.  It has Sub-bituminous to lignite 
type coal reserve of 38.82 million tons at production levels of 
185,533 tons per year. 
 
¶9. (SBU) Hazara Phosphate Fertilizer Limited (HPFL): HPFL is located 
in Haripur, North West Frontier Province, 75 km from Islamabad.  The 
 
ISLAMABAD 00003598  002 OF 003 
 
 
factory is situated on 57 acres of developed land, and includes 
factory, housing and other amenities.  HPFL is operating in the 
fertilizer industry and manufactures Granulated Single Super 
Phosphate fertilizers using a combination of indigenous phosphate 
rock from the Kakul mines near the plant and imported rock from 
Jordan and Morocco. 
 
¶10. (SBU) Khewra Salt Mines (KSM): KSM is located in Khewra, Punjab, 
about 160 km from Islamabad.  It is the second largest salt mine in 
the world and attracts up to 40,000 visitors per year.  Situated in 
the foothills of the Salt Range, in an underground area of about 110 
sq. km, the KSM are the oldest mines in the sub-continent.  Salt has 
been mined at Khewra since 320 BC.  KSM has an estimated total of 
220 million tons of rock salt deposits.  The current production from 
the mine is 325,000 tons of salt per year.  There are seven thick 
salt seams with a cumulative thickness of about 150 meters.  At 
places the rock salt is 99 percent pure. 
 
¶11. (SBU) Small and Medium Enterprise Bank (SME): SME Bank is a 
public limited company that provides a range of financial services 
designed for businesses under 250 employees if a manufacturing 
concern, or 50 employees if a trading/service concern.  SME has 
approximately 630 permanent and contractual employees and 27 
branches across Pakistan. 
 
¶12. (SBU) Kot Addu Power Company (KAPCO): KAPCO is a large 
independent power producer, with a power generation capacity of 1600 
megawatts.  The government transferred management control and thirty 
six percent of the total shares to International Power in 1996.  The 
government now holds 64 percent of KAPCO's total 880 million issued 
shares.  The GOP plans to issue global depository receipts of KAPCO 
in the international stock markets. 
 
¶13. (SBU) Faisalabad Electric Supply Company (FESCO): FESCO is one 
of the nine-electricity distribution companies (DISCOs) established 
as a result of the unbundling of the vertically integrated power 
division of WAPDA. It was organized to take over the properties, 
assets, obligations and liabilities of former Faisalabad Area 
Electricity Board of WAPDA.  The company was incorporated in March 
1998 as a public limited company.  FESCO distributes and supplies 
electricity to a service area with a population of over 15.5 million 
to about 1.8 million customers. 
 
¶14. (SBU) Printing Corporation of Pakistan Press (PCP): PCP was 
incorporated in 1969 as a private printing corporation for the 
Federal Government Departments.  It is a self-financed private 
limited company. 
 
¶15. (SBU) Pakistan Machine Tool Factory (Pvt) Ltd. (PMTF): PMTF is a 
precision engineering goods manufacturing enterprise.  It was 
established in technical collaboration with M/s. Oerlikon Buhrle Co. 
of Switzerland, a manufacturer of machine tools.  The factory came 
into regular production in 1971.  It is located about 35 km from 
Karachi City near Landhi Industrial Estate and spread over an area 
of 226 acres out of which 17 acres are occupied by works.  The 
factory employs about 1900 engineers, technicians, workers, and 
other service staff.  This factory is a unit of State Engineering 
Corporation of Pakistan and is engaged in the production of machine 
tools, automotive transmissions and axles components, gears for 
locomotives, pressure die cast parts, and other products. 
 
¶16. (SBU) MORAFCO Industries Limited (MFCO): MFCO Industries 
manufactures and markets cooking oil and vegetable oil.  The company 
was founded in 1960 and is based in Faisalabad. 
 
¶17. (SBU) Services International Hotel (SIH): The government is 
inviting expression of interest for SIH located on the valuable 
real-estate location of Shahrah-e-Quaid-e-Azam, Lahore with an area 
of 113 square feet. 
 
¶18. (SBU) Sindh Engineering Company Limited (SEC): SEC is a private 
limited company in Karachi.  It manufactures trucks and spare parts. 
SED was taken over from Wazir Ali Group in 1972 under the Economic 
Reform Order. 
 
¶19. (SBU) Peshawar Electric Supply Company Limited (PESCO): PESCO is 
one of the nine electricity distribution companies (DISCOs) 
 
ISLAMABAD 00003598  003 OF 003 
 
 
established as a result of the unbundling of the vertically 
integrated power division of WAPDA.  The company was established and 
incorporated in April 1998 as a public limited company.  It was 
originally organized to take over the properties, assets, 
obligations and liabilities of former Peshawar Area Electricity 
Board of WAPDA serving North West Frontier Province (NWFP) of 
Pakistan including the tribal areas.  Subsequently, a new company 
Tribal Electric Supply Company Limited was spun out of PESCO in June 
2002 for supply to tribal areas of PESCO. The present service area 
of PESCO includes NWFP, but excluding the tribal areas.  PESCO 
distributes and supplies electricity to about 1.5 million customers. 
 
 
¶20. (SBU) COMMENT.  The GOP's fiscal year 2007-2008 privatization 
efforts raised only USD 26 million of the over USD 1 billion goal 
due to delays and cancellations.  Despite the immediate need for 
fiscal resources and government statements regarding the benefits of 
privatization, the proposed privatization schedule is conservative 
and already encountering strong resistance from the public and 
Parliamentarians.  END COMMENT. 
 
PATTERSON